August 28, 2003

As I look out of my office window and view the recently completed north tower of the Manchester Resorts' Hyatt Regency San Diego, I am gratified to see that, once again, the economic interests of San Diego won out in the face of controversy.

The newly expanded Grand Hyatt has already garnered national press coverage as being the largest hotel in the county and among the largest on the West Coast. It also carries the distinction of being the second largest Hyatt hotel in the world. The Los Angeles Times recently referred to it as a "Vegas-sized hotel by the sea."

And in this case, size definitely does matter. For years now, our convention industry has been working under an incredible deficit. There were simply not enough headquarter hotels downtown to even begin to satisfy the needs of future meetings business coming into San Diego because of the expansion of the convention center. (A headquarter hotel is defined as a property which offers a minimum of 1,000 guest rooms with ample meeting space and service facilities on site.)

Many of the large convention groups considering San Diego require large room blocks that only a headquarter hotel can provide. What is the advantage of this arrangement? First off, the convention organizers can entertain and hold smaller meeting functions in-house. Whether it is a board of directors breakfast or a cocktail reception for shareholders, these large groups want the convenience of having meeting facilities and services available on site. Only a large headquarter hotel can offer such amenities.

As long as a bulk of their delegation can be housed in a headquarter hotel, convention organizers are usually amenable to housing their overflow delegates in other hotel properties nearby. As a result, when one large convention comes to town to a headquarter hotel, many of the group's delegates will flow over to several other hotels, spreading the wealth throughout the city, so to speak.

However, if planners cannot find what they want in San Diego (i.e., a headquarter hotel that can accommodate their group), they will simply take their convention to another city.

Finally now, with the completion of the Grand Hyatt expansion, we can offer meeting planners another first-class headquarter hotel on a waterfront location with which few cities in the West can compete. The Grand Hyatt boasts an inventory of 1,625 rooms, a second grand ballroom and exhibition hall, and more than 125,000 square feet of meeting space-dimensions that are truly music to a meeting planner's ears.

What does this mean for San Diego's economy? The Grand Hyatt will directly generate an estimated $10 million in transient-occupancy tax (TOT) annually. This places the hotel among the largest single-source generators of TOT in San Diego. The city of San Diego uses TOT revenue to pay for basic city services such as police, fire, parks and libraries, as well as its investment in tourism promotional engines such as the San Diego Convention & Visitors Bureau and the San Diego Convention Center.

In fact, the Grand Hyatt's future TOT contributions will likely account for more than one half of the TOT generated by business booked into the convention center, which was estimated to be $19.3 million in the center's calendar year 2002. Hyatt officials report strong bookings now through 2010. These include conventions that represent industries such as pharmaceuticals, high tech, medical, insurance, automobile manufacturing and scientific research.

In addition to TOT, the hotel will also directly generate approximately $9 million in rent for the San Diego Unified Port District, more than any other port tenant and nearly 20 percent of the $59.1 million in taxes paid annually to the port by businesses located on tidelands. The expansion has added 300 new jobs, bringing the hotel's staff to more than 1,000 and placing it among San Diego's top 50 employers.

Thanks to the vision and perseverance of developer Doug Manchester and the Board of Port Commissioners in pushing the Grand Hyatt expansion through interminable hurdles, we have completed a major first step in solving our headquarter-hotel dilemma. But, unfortunately, it won't be enough to guarantee all the future business we are capable of handling.

While we are delighted we can now offer another first-class headquarter hotel to convention planners, we are not yet out of the woods. In fact, the sad reality is that the convention center expansion cannot be maximized to its full potential until we add more headquarter hotels to our inventory.

Not only do we continue to lose potential business among our existing client base, but we are also restricted in our ability to expand our customer base and penetrate new markets.

This is why the fate of the Campbell Shipyard development is so crucial to San Diego's convention industry and the health of the local business community that feeds off of this lucrative sector. The proposed Hilton headquarter hotel on the Campbell site is a crucial component to our remaining competitive in tomorrow's marketplace. The sooner this project, and the area surrounding it, can be developed, the better are our chances to attract larger conventions in markets we may have not yet explored.

But we're not just pushing for a hotel alone -- we definitely must create a vision for the development of the entire area. There are so many components that must come together to create an attractive urban environment that can be enjoyed by delegates and residents alike. We've got to look at how we can effectively develop the parcels of land across Harbor Drive to make the best use possible of this prime location. We must also take into consideration the next expansion of the convention center, the need for more parking, the creation of a green belt, and the addition of waterfront amenities when developing our design plans for the Campbell Shipyard site.

Fortunately, each day brings us closer to the completion of the downtown ballpark and the transformation of East Village into a sophisticated and trendy neighborhood. In the not-too-distant future, it will come alive with activity as residents, vacationers and convention delegates enjoy its ambiance and prime location within walking distance of the convention center and our headquarter hotels.

Our industry is grateful that those developments so crucial to the health of the convention industry overcame seemingly insurmountable odds and are being completed today. San Diego is well on its way to becoming a convention destination second to none -- while it remains the perfect place to live, work and relax.

Reinders is president & CEO of the San Diego Convention & Visitors Bureau. E-mail him at reint.reinders@sddt.com.